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Inequality and unemployment
The recession has caused a sharp rise in unemployment but, despite the role played by the financial sector, other parts of the economy are being particularly affected. A Financial Times study in June found that deprived areas of England were experiencing most of the rise in joblessness. Almost two thirds of the increase in people seeking Job Seekers’ Allowance was in relatively deprived parts of the country. These areas are found mainly in the Midlands, the north of England, and parts of London.
The Institute for Fiscal Studies updated its examination of inequality in Great Britain in a report published in May (Poverty and Inequality in the UK 2009). Income inequality, for example measured by the Gini coefficient, was constant in the first term of this Labour government, fell in the second, and rose again to historic levels in the third term up to 2007-08. This last period saw disposable incomes affected by rising inflation especially in food and fuel (mortgage rates were high too) while earnings growth was low. The immediate outlook for inequality is not clear since inflation rates are lower and the better off have seen earnings drop significantly with cuts in bonus payments and performance-related pay. However, unemployment is also rising.
A recent Trades Union Congress report (Life in the Middle) focused on the experience of what it regards as ‘middle income Britain’. This is defined as the 20% of the population around the median income level, which is around £20,000 pa. Based on a YouGov survey, the report showed that people in ‘middle Britain’ as defined in that way have very different experiences of life than those on professional middle class incomes. Their incomes are lower and they are more likely to have experienced unemployment. The TUC stated that the people it surveyed in this middle quintile are frustrated at their inability to meet rising expectations.
Stephen Beer.
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